New York Rejects Cigar Tax Cap

After much debate, New York State lawmakers finally passed a $132.5 billion budget last week, but not before throwing out a tax proposal that sought to give some relief to burdened tobacconists by capping the excise taxes on a single cigar to a dollar.

The $1 tax cap was included in the Senate version of the budget, but failed to garner support in the state Assembly.

The lobbying effort for the tax cap was heavy, with the Cigar Rights of America, the International Premium Cigars & Pipe Retailers, the Cigar Association of America and the state-level retailer association all involved.

These organizations had fought to provide some relief for the states' tobacconists who have had to shoulder one of the highest taxes on cigars in the United States—75 percent of the wholesale cost of a cigar—since it was raised last year.

Cigars are typically sold for twice the wholesale price. This means that a cigar with a $6 suggested retail price has a wholesale price of $3, and thus carries a state tax of $2.25 in New York.